“Walk me through the balance sheet.”
"Walk me through the balance sheet." This is the natural follow-up to the income statement — and the strongest answers don't just list the three sections, they show that Assets actually equal Liabilities plus Equity with real numbers. Use the figures below for Atlas Manufacturing Inc. — the same company from Case 1 — to build out its balance sheet as of the same fiscal year-end.
Task: Using the figures for Atlas Manufacturing Inc. below, compute Total Current Assets, Total Assets, Total Liabilities, and Total Equity — and confirm that the balance sheet actually balances.
The following balance sheet line items are reported as of the same fiscal year-end as Case 1:
| Line Item | Amount |
|---|---|
| Cash | $80.0m |
| Accounts Receivable | $60.0m |
| Inventory | $40.0m |
| PP&E, net | $220.0m |
| Goodwill & Intangibles | $50.0m |
| Accounts Payable | $35.0m |
| Short-Term Debt | $15.0m |
| Long-Term Debt | $150.0m |
| Common Stock & APIC | $100.0m |
| Retained Earnings | $150.0m |
Current assets are the items expected to convert to cash within a year.
Total Current Assets = Cash + Accounts Receivable + Inventory
Using this formula, compute Total Current Assets.
Adding the non-current assets — PP&E and Goodwill & Intangibles — to Total Current Assets gets you to Total Assets.
Total Assets = Total Current Assets + PP&E, net + Goodwill & Intangibles
Using this formula, compute Total Assets.
Liabilities follow the same current/non-current split as assets.
Total Liabilities = Accounts Payable + Short-Term Debt + Long-Term Debt
Using this formula, compute Total Liabilities.
Equity is the residual claim — what's left for shareholders after liabilities.
Total Equity = Common Stock & APIC + Retained Earnings
Assume:
Using this formula, compute Total Equity — and verify that Total Assets = Total Liabilities + Total Equity.
Try answering out loud first — then reveal the model answer and compare.